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Losing Group Health Plan Coverage Doesn’t Mean Ending Health Coverage

You have affordable insurance options.

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After your employer-sponsored health plan has ended you'll have several options for health insurance. By law you'll have 60 days to enroll in COBRA and continue the health plan you had with your employer at its full cost (plus an administrative fee of 2%). You should use this time to investigate alternative health plan options that can be less expensive, have similar benefits and share comparable provider networks. You may even qualify for Medicaid or a government subsidy. To see if you qualify, check out our Coverage Calculator.

COBRA coverage vs electing an individual plan.

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While COBRA can be elected in order to continue the same coverage that you previously had through your employer, it will typically only provide coverage for up to 18 months. By choosing an individual or family plan, you'll have the option shop for different levels of coverage. However, if you elect an individual plan, you cannot later go back to COBRA.

You may qualify for a government subsidy to reduce the cost of individual insurance.

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Depending on what your estimated income is for the year, you may qualify for a government subsidy, which may decrease your monthly premium if you buy your own insurance as an alternative to COBRA. To see if you qualify check out our Coverage Calculator.

Electing COBRA will allow you to maintain the same coverage that you had through your employer however, it is possible you could find similar coverage and keep the same doctors. Most doctors typically accept more than one type of insurance so by shopping for alternative coverage this may allow you to reduce your insurance premiums while keeping comparable coverage.

Have More Questions?

Below are our lists of available resources that can help guide you through this process. We also have a thorough knowledge base of FAQ's available.

COBRA Knowledge Base

If you recently lost your job, you may be eligible for the continuation of your health insurance benefits through a government law known as COBRA, short for the "Consolidated Omnibus Budget Reconciliation Act." COBRA provides the bridge between group health insurance plans for qualified workers, their spouses and their dependent children when their employer-provided health insurance might otherwise be cut off after a job loss.

COBRA applies to all companies with 20 or more employees (governments, the District of Columbia and certain church-related organizations are exempt). Under COBRA, individuals who lose their jobs (except for reasons of gross negligence) are eligible to keep the same health insurance coverage they had while they were an employee. However, this comes at cost: since you are no longer an employee, your employer can charge you for the full cost of your plan plus an additional 2% administrative fee.

COBRA can be a valuable first option for people who recently lost their job, but it's not the only option available. It's important to understand all your options and alternatives before making a decision about your health coverage as you move forward.

FAQ's

How do I know if I am eligible for COBRA?

You are eligible for COBRA if you had coverage in your employer's health plan on the day of a qualifying event (e.g., you lost coverage). You should receive a notice from your employer explaining your COBRA rights. Be sure to contact your employer if you have questions.

Is my family eligible for COBRA?

If your family was enrolled in your employer's health plan on the day of the qualifying event, they are eligible to continue coverage.

If I lost coverage because of a divorce, can I get COBRA?

Yes, if you lost coverage and are no longer enrolled in your ex-spouse's plan, you may be eligible to continue coverage through COBRA.

Will I get COBRA when I retire?

If you are under age 65 and were enrolled in coverage before you retired you will be offered COBRA for 18 months. Tip: As an alternative to COBRA, the individual exchanges can offer a broader array of available options that might help you buy more or less expensive insurance based on your anticipated medical needs.

Is my employer required to offer COBRA coverage?

Your employer is required to offer COBRA coverage if they offer an employer-sponsored health insurance plan and employ at least 20 employees. Government employees do not qualify for COBRA. They are protected under a different law.

What is a Qualified Beneficiary?

In most cases you are a Qualified Beneficiary if you were participating in your employer's health plan and you lost your coverage. However, COBRA extends to your spouse and dependents as well. For example, you could choose to accept coverage under COBRA for just yourself or for your family. You can also choose to forego COBRA for yourself and just cover your spouse or dependent children.

What is a Qualifying Event?

Generally, a qualifying event is something that affects your employment status. The chart below outlines the circumstances under which you or a covered dependent may opt to continue your health insurance coverage through COBRA:

Qualifying Events for COBRA

Employee

If you leave your job voluntarily; this includes retirement

If your work hours are reduced so that you are no longer eligible for health benefits under your employer's policy

If you leave your job involuntarily for any reason other than gross misconduct

Employee's Spouse

If the employee's work hours are reduced

If the employee leaves the job for any reason other than gross misconduct

If the employee becomes entitled to Medicare

Divorce or legal separation

Death of the employee

Dependent Children

If the employee's work hours are reduced

If the employee leaves the job for any reason other than gross misconduct

What if my employer decides to change health plans, would that be a qualifying event?

No. A qualifying event is something that affects your employment status (i.e., job loss or significant reduction in hours). Events that affect only the insurance plan are not qualifying events.

How long do I have to decide if I want COBRA?

You have 60 days to elect COBRA after your last day of employment (starting at the later of the day you lost coverage or the date you are provided with your COBRA election notice). Importantly, you do not need to elect COBRA coverage immediately, you have 60 days to make the election and your election will be retroactive.

If I have family insurance and I elect to stay on COBRA does that mean my wife and kids need to stay on the same plan?

No. each of the qualified beneficiaries may independently elect COBRA coverage. That means if both you and your spouse are entitled to elect continuation coverage you may decide separately whether to elect continuation coverage.

Why is COBRA insurance so expensive?

Employers may require employees electing COBRA to pay the full cost of the insurance plus a 2% administrative charge. Since employers usually pay a portion of the insurance cost this can seem like a significant price increase. Additionally, the coverage employees receive is based on Group coverage which may be somewhat more expensive than individual insurance.

What does COBRA stand for?

COBRA is derived from the bill that created the continuation coverage, Consolidated Omnibus Budget Reconciliation Act. Passed in 1986 this bill requires continuation coverage be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage is lost due to certain, qualified events.

How long does COBRA coverage last?

In most states the standard is 18 months however some people are eligible for up to an additional 18 months. This term can be shortened if:

you do not pay your premiums on a timely basis

your employer stops maintaining a group health plan

you obtain coverage with another employer

a beneficiary becomes entitled to Medicare benefits

Do I need to enroll in all of the plans I had while I was an active employee (medical, dental and vision) if I elect COBRA coverage?

No. You can elect to keep any, all or none of the plans in which you were enrolled.

Will my deductible amounts carry over if I switch plans mid-year?

No. If you switch plans you will effectively start a new with your new plan, which means you will have to start building towards a new deductible.

If I elect COBRA will my deductible carry over?

Yes. Since you are continuing coverage your deductible and any costs that you have already applied to it will carry over.

Can I drop my COBRA coverage and purchase insurance in the marketplace?

If you have already elected COBRA continuation and have paid for coverage you cannot transition to individual coverage until the open enrollment period. In order to switch coverage during the Special Enrollment Period you must have a qualifying event and voluntary termination of COBRA insurance is not considered a qualifying event.

Can I apply for individual health insurance instead of electing COBRA?

Yes. Involuntary loss of coverage is considered a qualifying life event (QLE) which makes you eligible to enroll outside of the annual enrollment period. Under special enrollment you could elect to enroll in your spouse's plan or enroll in marketplace coverage. To take advantage of the special enrollment period you must enroll within 30 days of the loss of coverage.

Are there any reasons I might prefer to stay on my employer plan via COBRA rather than switch to individual coverage?

Yes. In certain circumstances it may be advantageous to you to continue with you existing coverage - for example if you are in the middle of an episode of care (e.g., cancer treatment) and you don't want to change your provider. Other items that you should consider in evaluating which option is best include: the provider network offered (is your existing doctor in it?), hospitals, and particular drugs that may not be covered under certain insurance programs.

Do I Qualify for a Subsidy?

Find out if you qualify for a Government insurance exchange subsidy by completing our simple questionnaire with our coverage calculator.

Disclaimer
Aon Hewitt does not give any warranty or other assurance as to the operation, quality, or functionality of the site. Access to the site may be interrupted, restricted, or delayed for any reason.Aon Hewitt also does not give any warranty or other assurance as to the content of the material appearing on the site, its accuracy, completeness, timelessness, or fitness for any particular purpose. Should you choose to go to the Aon Retiree Health Exchange and/or eHealth website and enroll in insurance coverage, Aon Hewitt Health Market Insurance Solution Inc. and/or eHealth, Inc. may be compensated for that enrollment. By law, any such arrangement will not impact your premiums.